Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 26, 2016
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Income on account of remission of principal amount of loan - depreciation is neither a loss nor an expenditure nor a trading liability, therefore, settlement of principal amount by the bank/financial institution cannot be assessed U/s 41(1) of the Act. - AT
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TDS u/s 194C OR 192 - payment to individual workers or works contractor - assessee has been paying the labour contract charges in preceding years and, therefore, the submission of the assessee that the payment to individual workers is covered u/s 192 cannot be accepted - AT
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Jurisdiction of ITAT - No new plea can be raised by invoking the jurisdiction of the Tribunal u/s 254(2) of the IT Act, 1961. The Tribunal is bound to adjudicate only on the grounds which are specifically raised and urged by the assessee to which specific attention of the Tribunal was drawn. - AT
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Addition on the basis of TDS certificate - Work in progress / receipt of advance - the question is to check whether the income of the assessee has been offered to tax or not during the subsequent period - matter remanded back for verification - AT
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TDS u/s 194A - non deduction of tds on payment of hire charge - The payment of hire charges does not fall under the term interest as defined in section 2(28A) of the Act and consequently the payments are not liable for deduction of tax at source u/s 194A - No TDS is required - AT
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Addition u/s 68 - only obligation of the company receiving the share application money is to prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received - AT
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The Central subsidy given for installing the food processing units in the specified areas is not asset specific but is industry specific. Therefore, it cannot be treated as income of the assessee. - AT
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Benefit of exemption u/s 11 and 12 - As the activities carried out by the Assessee certainly amounts to charitable purpose, as it is being covered under the limb “education” to the definition of charitable purpose is contained in section 2(15) exemption allowed - AT
Wealth-tax
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Inclusion of land into net wealth - t is to be remembered that proposal of the road through the subject land and pending finalization and demarcation of exact location, the authorities concerned may not permit any construction over the land. Therefore, this disadvantageous position faced by the assessee cannot be ignored while valuing the land. - AT
Service Tax
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Claim for refund of service tax alleged to have been collected from them contrary to law - Service tax was paid by the provider of "construction of residential complex service" - claim of refund by the joint owner / purchase of flat - refund allowed - AT
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Demand of service tax may be exigible on the net discount/commission earned, but in absence of proper classification, both in the show-cause notice and the impugned order, demand set aside - AT
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Demand of service tax from the person who is sub-letting of CAB - It is not the Revenue’s case that the respondent himself provided such services or letting of vehicles to the other sub-contractors is also covered by the definition of rent-a-cab service. - demand set aside - AT
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Quantum of Refund of service tax on services provided by commission agent, located outside India - for export of goods - Revised rate of 10% of the FOB value (old rate 2%) has retrospective effect - AT
Central Excise
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Refund claim of excess central excise duty as a consequence of finalization of provisional assessment on account of discounts provided to various dealers/ customers on the provisional value - the refund claim of the appellant is not hit by the doctrine of unjust enrichment - AT
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Manufacture - captive consumption - Oxygen produced by appellant is not used by appellants in their factory of production. The same is cleared to factory of FSNL and used by FSNL, though on behalf of appellant - benefit of notification No.67/95 not available - AT
VAT
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Denial of Input Tax and Credit (ITC)- GVAT - purchase of castor oil seeds for production of castor oil - Only the waste is used as fuel and that too again in the manufacturing process of oil. - Credit cannot be denied - HC
Case Laws:
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Income Tax
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2016 (2) TMI 755
Adjustment of refund of other firms as payment under section 140A in the case of the assessee for the purpose of charging interest - Held that:- As is well known, the Income Tax Act provides detail provisions for granting interest on refund as well as charging interest on unpaid tax or tax paid after delay. Excess tax paid by one assessee cannot be offset against shortfall of tax of another assessee in order to curtail the interest liability of the debtor. The CIT(Appeals) was conscious that the statute would not permit this. He, however, taking into account peculiar facts of the case granted such relief. In our opinion, the same was wholly impermissible in law. In case of Commissioner of Income Tax vs. Anjum M.H.Ghaswala and ors. [2001 (10) TMI 4 - SUPREME Court] held that charging of interest under Section 234A, 234B and 234C of the Act is mandatory. The Court opined that the word “shall” in the said section cannot be construed as “may”. Earlier, expression used “may” was substituted by the word “shall” giving clear indication of the intention of the legislature to make the collection of statutory interest mandatory by a peculiar device. CIT (Appeals) as well as the Tribunal, in the present case, made such mandatory requirement otios. The assessee had not paid the self assessed tax. To the extent of shortfall, it was liable to pay interest. Such interest liability could not have been waived by making adjustment of any possible refund in cases of assessments of other assesses. - Decided in favour of the Revenue.
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2016 (2) TMI 754
Penalty u/s.271(1)(c) - income offered for taxation during survey and return of income was revised after detection by department - Held that:- Commissioner of Income Tax(A) during the penalty proceedings had again examined the issue whether the claim of capital gain made in the regular return of income to the extent of ₹ 1.62 Crores with the particulars in support of the same. On examination, the CIT(A) reaches a prima facie conclusion that the income could be regarded as long term capital gain. Once the aforesaid conclusion has been reached coupled with two further facts viz. the authorities have rendered a finding of fact that the Respondent-assessee had not concealed its income nor filed inaccurate particulars attributable to capital gains in its regular return of income, the view taken to delete the penalty is a possible view. - Decided in favour of assessee
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2016 (2) TMI 753
Deemed dividend u/s 2(22)(e) - Held that:- Advance has been given by one Group Company to another so that that company is able to carry out and pursue its business activities with another party. This has not been doubted by the AO. It therefore, implies that this was a genuine business advance and not a ploy to pass on the profits as an advance and not as dividend in order to save payment of tax on dividend distribution. Base on above discussion, it is to be held that advance given by M/s. ABP Pvt. Ltd to the appellant cannot be categorized as deemed dividend u/s. 2(22)(e) of the I.T Act, 1961 - Decided in favour of assessee. Nature of expenditure - revenue v/s capital - Held that:- The expenditure incurred by the assessee towards brokerage, stamp duty and registration charges for acquiring the office space of 5650 sq.ft at Gariahat Mall on lease for the purpose of assessee’s business was squarely allowable as revenue expenditure and cannot be added at any stretch of imagination as capital expenditure.- Decided in favour of assessee. Filing fees paid to Registrar of Companies [ ROC] towards increasing of authorized capital is not allowable as revenue expenditure. See Punjab State Industrial Development Corporation Vs. CIT reported in (1996 (12) TMI 6 - SUPREME Court) - Decided against assessee Legal & professional charges - Held that:- We also find that the ld. AO had merely disallowed the said legal & professional expenses by treating the same as capital in nature without adducing any reason for the same. We hold that these expenses are required for obtaining clearances/licenses in connection with business activity of the assessee. Accordingly, it is squarely eligible for deduction. - Decided in favour of assessee Disallowance u/s 14A - Held that:- We find that the assessee had incurred only long term capital loss after indexation and in order to invoke the provisions of section 14A of the Act, the existence of exempt income is sine qua non . The ld. AO has not disputed the long term capital loss claimed by the assessee and had allowed the same. Hence, in this scenario invoking the provisions of rule 8D(2)(iii) of IT Rules 1962 directly without recording the satisfaction in terms of rule 8D(1) is not warranted in accordance with law. - Decided in favour of assessee
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2016 (2) TMI 752
Disallowance of prior period expenses u/s 40(a)(ia) - Held that:- When the expenditure actually paid in the assessment year under consideration, it is allowable on actual payment basis in view of the second limb of proviso to sec.40(a)(ia) of the Act. No expenditure mentioned in sections 30 to 38 of the Act are allowable unless the necessary TDS is deducted and remitted into the government account before filing of return u/s.139(1) of the Act. The provisions of sec.40(a)(ia) stipulate that the expenses are allowable only in the year in which the necessary TDS is deducted and remitted into the government account. In the present case, though the expenditure relating to earlier period, actually TDS made in the assessment year under consideration and it is allowable in the assessment year under consideration in view of the second limb of sec.40(a)(ia). Thus in view of Provisos to section 40(a)(ia) and 40(a)(i) the deduction claimed by the assessee has to be allowed in the year in which the tax was actually paid by the assessee. - Decided in favour of assessee
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2016 (2) TMI 751
Disallowance in respect of contribution to the employees PF & ESI u/s.43B - Held that:- As decided in M/s. Farida Shoes Pvt. Ltd. [2016 (2) TMI 376 - ITAT CHENNAI] as the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income, thus no disallowance required - Decided in favour of assessee Disallowance made u/s.40(a)(ia) - non deduction of tds - payments of Commission, contract payments, professional charges, shipping and forwarding expenses, freight on exports, clearing and forwarding charges - Held that:- Similar issue came consideration before this Tribunal in the case of Shri N.Palanivelu Vs. ITO, Salem reported in [2015 (10) TMI 1415 - ITAT CHENNAI ] wherein it was held that the disallowance under section 40(a)(ia) of the Act was not applicable, when there was no outstanding balance at the end of the close of the previous year. The assessee failed to bring details of outstanding expenses or schedule of sundry creditors showing whether the amount was outstanding at the end of the close of the previous year in the name of the party or outstanding expenses. The Assessing Officer was to verify the matter and examine afresh. If no amount was outstanding at the close of the previous year in respect of the expenses either as outstanding expenses or as sundry creditors, the amount could not be disallowed. Hence the amount outstanding as payable at the end of the close of the Financial year i.e. 31st March only be disallowed by applying the provisions of Sec.40(a)(ia) of the Act. Accordingly we direct the ld. Assessing Officer to disallow the only amount which is outstanding at the end of the close of the previous year relevant to the assessment year and accordingly for limited purpose to verify the outstanding amount towards impugned amount at the end of the close of the previous year relevant to the assessment year, we remit the issue back to the file of the ld. Assessing Officer.
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2016 (2) TMI 750
Income on account of remission of principal amount of loan - CIT(A) confirmed addition as income of the assessee - Held that:- The assessee company is manufacturing of woolen yarn and other wool items and taken loan from bank and financial institutions. The assessee company had become sick company and before BIFR the banks/financial institutions had settled its outstanding loan whereby the principal loan amount of ₹ 29,40,94,000/- was written back. The loan was taken long time back for installing plant and machinery and same was on account of capital account. The case laws referred by the ld CIT(A) i.e. decision of CIT Vs. Sundaram Iyengar (T.V.) and Sons Ltd. (1996 (9) TMI 1 - SUPREME Court ) is not squarely application as wherein the assessee got the benefit of depreciation and on the other hand remission of the principal, which is covered U/s 28(iv) of the Act. As per Section 28(iv) the value of any benefit or prerequisite whether converted into money or not arising from business or the exercise of the profession can be taxed. Even the Hon'ble Supreme Court in the case of Nectar Beverages Pvt. Ltd. Vs. DCIT (2009 (7) TMI 5 - SUPREME COURT ) has held that depreciation is neither a loss nor an expenditure nor a trading liability, therefore, settlement of principal amount by the bank/financial institution cannot be assessed U/s 41(1) of the Act. The other case laws referred by the AR particularly the decision in the case of Mahindra & Mahindra Ltd. Vs. CIT (2003 (1) TMI 71 - BOMBAY High Court ) and CIT Vs. Tosha International Ltd. (2008 (9) TMI 31 - HIGH COURT DELHI ) and others are squarely applicable. Therefore, we delete the addition confirmed by the ld CIT(A). - Decided in favour of assessee Addition made U/s 145A on account of excise duty leviable on closing stock - Held that:- The goods are lying in the warehouse and on production, excise duty is not payable it is payable at the time of goods cleared from the warehouse, therefore, no adjustment U/s 145A on account of excise duty is required to be made as per law.- Decided in favour of assessee
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2016 (2) TMI 749
Deduction under Section 10A - non filing of Return of income - Held that:- On perusal of the assessment order, it appears that for the assessment year 2006-07, the assessee filed return of income on 30.11.2006. It is not known what was the due date for filing return of income for the assessment year 2006-07. Similarly, for other assessment year also it is not clear from the orders of the lower authorities the due date for filing return of income under Section 139(1) of the Act specified by the CBDT. Therefore, the order of the CIT(Appeals) is set aside on this issue and the matter is remitted back to the file of the Assessing Officer to verify the due date for filing return of income under Section 139(1) for the respective assessment years. After verification, if the Assessing Officer found that the return of income was filed within the due date specified under Section 139(1), then the assessee is eligible for deduction under Section 10A of the Act. If, for any reason, if the Assessing Officer came to a conclusion that the return of income was not filed under Section 139(1), then the assessee is not eligible for deduction under Section 10A of the Act. Therefore, for a limited purpose of verifying the due date for filing the return of income under Section 139(1) of the Act, the matter is remitted back to the file of the Assessing Officer. Disallowance under Section 14A - CIT(A) allowed the claim - Held that:- For the assessment years 2006-07 and 2008-09, the investments were made in 100% foreign subsidiary companies. No fresh investment had been made in the financial years 2008-09 and 2009-10. Since the investment was made in the subsidiary companies in the form of equity, the CIT(Appeals) corectly found that such investment is outside the scope of Section 14A of the Act. When the assessee invested the funds in subsidiary companies, as rightly submitted by the Ld.counsel for the assessee, the intention is not for earning the exempt income but because of commercial expediency. Therefore, as rightly found by the CIT(Appeals), the provisions of Section 14A would not be applicable for the assessment year 2006-07 and 2008-09. In view of this, we find no reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed. - Decided against revenue
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2016 (2) TMI 748
Disallowance u/s 40(a)(ia) - TDS u/s 194C OR 192 - payment to individual workers - Held that:- This is an accepted fact by the assessee that individual workers to whom payment has been made by the assessee are not on the payroll of the employees meaning thereby that the workers were not employees of the company. These individual workers were working for the assessee company on behalf of labour contractor M/s Surgi Pharm Industries. Going through the Tax Audit report we find that assessee has not claimed the payment to labour contractor as salary payment and the Tax Auditor has certified that the payments made to individual workers were actually the payment on behalf of the labour contractor M/s Surgi Pharm Industries and such payment was duly covered within the ambit of the provisions of section 194C of the Act and TDS was required to be deducted by the assessee. It seems that at a later stage (during the course of assessment proceedings) assessee has taken plea that the payment was actually made to individual workers but the actual position at the time of finalization of books of accounts as well as upto the completion of Tax Audit u/s 44AB of the Act was that the payment was made to individual workers was a payment on behalf of labour contractor to whom assessee has been paying the labour contract charges in preceding years and, therefore, the submission of the assessee that the payment to individual workers is covered u/s 192 of the Act cannot be accepted - Decided against assessee Disallowance of interest expenditure - Held that:- CIT(A) has duly accepted the submissions of the assessee and has, therefore, reduced the addition of disallowance of interest expenditure by restricting it to 3.5% being average interest cost of total fund given as interest free funds. We are, therefore, of the view that as a total fund of the assessee comprising of own capital, interest free unsecured loans as well as interest bearing funds are all moving through a common bank account and the application of this fund is for business as well as at sometimes interest free loan & advance use and ld. CIT(A) has rightly applied 3.5% rate of interest on the average balance of interest free loans and advances. We, therefore, uphold the order of CIT(A) and dismiss this ground of assessee.
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2016 (2) TMI 747
Levy of penalty u/s 271(1)(c)- rectification of mistake - whether Tribunal had failed to adjudicate the ground that the show cause notice was issued, before levy of penalty u/s 271(1)(c) of the IT Act, 1961, in a mechanical manner without application of mind - Held that:- On mere perusal of the grounds of appeal raised in the memo of appeal shows that no such ground was raised before this Tribunal nor the counsel for the assessee could demonstrate before us that the issue was argued during the course of hearing of the appeal before the Tribunal. No doubt, the decision of the Hon’ble jurisdictional High Court in the case of CIT Vs Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) was referred by the counsel during the course of hearing of the appeal, but it was only in support of the proposition that in the absence of mala fide on the part of the assessee, no penalty can be levied u/s 271(1)(c) of the IT Act, 1961. This Tribunal had considered this decision and rendered a finding at para-5.2 of the order. There is no whisper either in the order of the CIT(A) or in the order of the Tribunal that the assessee had advanced this plea. No new plea can be raised by invoking the jurisdiction of the Tribunal u/s 254(2) of the IT Act, 1961. The Tribunal is bound to adjudicate only on the grounds which are specifically raised and urged by the assessee to which specific attention of the Tribunal was drawn. It is crystal clear that there is no mistake apparent from record which is capable of being rectified by exercising the power vested u/s 254(2) of the IT Act, 1961. Hence, the Miscellaneous Petition filed by the assessee is dismissed.
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2016 (2) TMI 746
Grant of registration u/s 12A and recognition u/s 80G denied - CIT(E) denied the registration only on the ground that the appellant-trust had not furnished the clarification as to receipt of rental income for conducting tuitions and the appellant-trust was not serious in prosecuting the applications - Held that:- The contentions of the ld.CIT(E) are not tenable in the facts of the present case as the appellant-trust had duly complied with all the letters issued by him and therefore, the ld.CIT(E) should not have held that the appellant-trust was not serious in prosecuting the applications. The receipt of rental income by the appellant-trust can be examined only during the course of assessment proceedings by the Assessing Officer after grant of registration. It was so held by the Hon’ble jurisdictional High Court in the cases of Sri Gururaja Seva Samithi [2015 (7) TMI 954 - KARNATAKA HIGH COURT ]. The Hon’ble jurisdictional High Court in this case had clearly held that the question of verifying the activities of the trust can be considered only after it is registered and carries on activities subsequently. Thus genuineness of the activities of the trust and nature of receipt of any sum of money cannot be gone into at the time of registration of the trust. It is only after the activities of the trust are commenced, the genuineness of the objects can be examined during the course of assessment proceedings, after the grant of registration by the IT Authorities. Respectfully following the ratio laid down in the cases cited supra, we direct the ld.CIT(E) to grant registration u/s 12A of the IT Act. Thus, the appeal filed by the trust is allowed. Also we direct the ld.CIT(E) to grant approval u/s 80G of the IT Act. - Decided in favour of assessee
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2016 (2) TMI 745
Receipt from trial run of berth hire charges - whether treated as business income - Held that:- In the instant case the income generated during trial run is very much connected with the business of the assessee hence the question of recognizing the income does not arise as the commercial operation has not began. In view of above we reverse the order of the ld. CIT(A) - Decided in favour of assessee Addition on the basis of TDS certificate - Work in progress - Held that:- AO has found out that the assessee has understated his income on basis of the discrepancy noticed in the TDS certificate. On the other hand the ld. AR submitted that the assessee has taken advance from the party during the year against which the amount of work in progress was shown in the balance sheet of the assessee. The ld. AR further submitted that such work in progress has been offered to tax in the subsequent year. The ld. AR has submitted the financial statement of the subsequent year of the assessee in support of his claim. Now the question before us is to check whether the income of the assessee has been offered to tax or not. So for this purpose we are restoring the file to the AO with the direction to check whether the income of the assessee has been disclosed in the subsequent year or not. If yes then delete the addition made by the assessee. - Decided in favour of assessee for statistical purposes.
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2016 (2) TMI 744
Interest paid on loans utilized for advancing to sister concern - commercial expediency - Held that:- We hold that the advances were made by the assessee to its wholly owned subsidiary company during the course of its business and is a strategic investment and as a measure of commercial expediency to protect its business interests. Accordingly we don’t find any infirmity in the order of the Learned CIT(A) in deleting the addition . - Decided against revenue. Deferred revenue expenditure towards Technical Information Reference Material (TIRM) - Held that:- this issue has been allowed by the revenue in the earlier two assessment years with regard to the deferred revenue expenditure incurred towards TIRM based on license agreement entered into by the assessee with NIIT and in the asst year under appeal, the said agreement having expired, the assessee chose to write off the unabsorbed deferred revenue expenditure in its books. Hence we find that there is no mistake in the claim of the assessee - Decided against revenue
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2016 (2) TMI 743
TDS u/s 194A - non deduction of tds on payment of hire charge - Held that:- The payment of hire charges does not fall under the term interest as defined in section 2(28A) of the Act and consequently the payments are not liable for deduction of tax at source u/s 194A of the Act. Hence no disallowance u/s 40(a)(ia) of the Act is warranted. - Decided against revenue TDS on lorry hire charges and trailer hire charges - Held that:- We find that the assessee had filed all the details before the Learned CIT-A wherein he observed that no single payment exceeding ₹ 20,000/- and no payment exceeding ₹ 50,000/- was made to any party during the year. In the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction Addition u/s 40A(3) - Held that:- We find that the violation u/s 40A(3) of the Act is independent of other addition made on estimated basis by the Learned AO for want of supporting bills and vouchers. Moreover, the Learned AO had duly reduced the amount of cash expenses exceeding ₹ 20,000/- while making the estimated disallowance of expenses and hence the action of the Learned AO cannot be faulted with. - Decided against assessee
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2016 (2) TMI 742
Addition u/s 68 - receipt of equity share capital , preference share capital and preference share application money - Held that:- We find that the assessee had given the complete details about the share applicants clearly establishing their identity , creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much made available to him by the assessee. We find that the reliance placed by the Learned CITA on the decision of the Hon’ble Apex Court in the case of CIT vs Lovely Exports (P) Ltd reported in (2008 (1) TMI 575 - SUPREME COURT OF INDIA ) is very well founded, wherein, it has been very clearly held that the only obligation of the company receiving the share application money is to prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. - Decided against revenue
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2016 (2) TMI 741
Revision u/s 263 - incorrect assessments under section 143(3) read with section 153A - Central subsidy given for installing the food processing units is to be tretaed as income of assessee as per CIT(A) - Held that:- A.O. could not have considered any other material, other than the material found during the course of search, during the assessments completed under section 143(3) read with section 153A of the I.T. Act. The Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (2015 (5) TMI 656 - BOMBAY HIGH COURT ) has clearly held that the assessments under section 143(3) read with section 153A/153C have to be confined only to the material found during the course of search. Further, even on merits, we find that the Central subsidy given for installing the food processing units in the specified areas is not asset specific but is industry specific. Therefore, it cannot be treated as income of the assessee. Therefore, the assessment order is not erroneous in so far as it is prejudicial to the interests of the Revenue. Hence, on both the counts, we hold that the order of the Ld. CIT under section 263 is not sustainable. - Decided in favour of assessee
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2016 (2) TMI 740
Non payment of court fee - requirements of Section 249( 4)(a) - Held that:- We deem it fit and proper to remit the issue to the file of the Ld. CIT(A) with a direction to verify the facts mentioned by assessee herein and if it is found that the cash seized during the course of search and also recovered thereafter, is sufficient to meet the tax liability for the above three years, the Ld. CIT(A) shall entertain the appeals and the assessee shall file application for condonation of delay which shall be considered by the Ld. CIT(A) on merits.
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2016 (2) TMI 739
Agricultural Income - CIT(A) confirmed the treatment of agricultural income as ‘income from other sources’ - Held that:- There is no dispute with reference to the fact that assessee owns agricultural land and also purchased 4.71 guntas of land in September, 2004. Considering the value of the land purchased and the extent of agricultural income offered, the AO’s contentions seems to be partially correct. Since assessee is not in a position to furnish any evidence to substantiate the incomes earned and returned, we have no option than to estimate the agricultural income at a reasonable basis. Assessee’s submission that it has grown Paddy, Grapes and Vegetables on a piece of land of 1.27 acres cannot be accepted as it is not possible to cultivate all the three in small piece of land. However, since assessee owns some agricultural land in the impugned years, we are of the opinion that income at ₹ 10,000/- per acre can be justified as a reasonable income earned on the said lands. Accordingly, AO is directed to accept income at ₹ 10,000/- per acre for AY. 2005-06, 2006-07, 2007-08. The balance of the income in each year is confirmed as ‘income from other sources’ as was done by the AO. - Decided partly in favour of assessee Disallowance u/s. 80C - CIT(A) while allowing the payment to LIC in AYs. 2006-07 & 2007-08, did not allow the repayment of principal amount on the housing loan obtained - Held that:- . Before us, Ld. Counsel fairly admitted that assessee did not have any evidence of payment of these amounts. Since assessee is not forthcoming with any evidence, we do not find any reason to interfere with the order of the CIT(A). Accordingly, the grounds on disallowance u/s.80C are dismissed. Additions based on agreement of sale - Held that:- Assessee not only submitted various evidence, but also affidavits in support of the contentions that the document of agreement of sale is only a security obtained for chit fund business. AO did not make any enquiry, the fact of which is also noted by the Ld. CIT(A). In view of this, since assessee’s modus oparandi was accepted by the CIT(A), we are of the opinion that the additions cannot be made simply on the basis of agreement of sale found with the assessee, when they are not intended for purchase of property. However, since AO has not enquired properly, we hereby set aside the issue to the file of AO to examine the concerned parties from whom agreement of sale were obtained to establish whether the transaction is of ‘agreement of sale’ or ‘security for chit fund business’ and grant necessary relief after due enquiry. Assessee should be given due opportunity to substantiate the claim and assessee is free to furnish necessary documents/evidences/confirmations/affidavits in support of his contentions. With these observations, balance of addition as raised by assessee for AYs. 2006-07, 2007-08 and 2010-11 are restored to the file of AO for proper enquiry. - Decided in favour of assessee for statistical purposes. Addition based on Promissory Notes - Held that:- Since the promissory notes are available with the department (by this time, they would have been time barred), it is necessary that AO makes necessary enquiries with the persons who executed the promissory notes to ascertain whether assessee has advanced cash or obtained them towards security for the chit availed by them. Unless proper enquiry is made, it would not be proper to refuse assessee’s contentions, when part of the contentions with reference to ‘agreements of sale’ were accepted. In view of this, we are of the opinion that necessary enquiries with the persons who executed promissory notes is required to be conducted by the AO to know the exact nature of a transaction and then take a decision whether the amount can be brought to tax as unexplained investment/ unexplained asset or not. For this purpose, we set aside the orders of the AO and CIT(A) on this issue and restore the matter to the file of AO for fresh enquiry.- Decided in favour of assessee for statistical purposes. Claim of interest on the bank OD - Held that:- The assessee contention cannot be rejected simply because AO did not comment on the issue. There is evidence that assessee has obtained Over Draft from the bank. If the amount was utilized for the purpose of business, the interest paid thereon should be allowed as a deduction while computing income from ‘profits and gains of business’. Since the AO has not examined this claim, we set aside the issue to the file of AO to examine the claim of the assessee and the purpose for which the borrowed funds were utilized. Assessee should be given due opportunity, before taking any decision adverse to the interest of assessee. - Decided in favour of assessee for statistical purposes.
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2016 (2) TMI 738
Treatment to land - agricultural v/s non agricultural - selection of assessment year - Held that:- Since the facts in the present case indicate that assessee has sold away the agricultural land and there is no intention or evidence that land was converted to non-agricultural land or put to use for nonagricultural purposes, the contention that purchaser used the land for the purpose of Engineering College cannot be held against the assessee so as to treat the land as non-agricultural land. It is also deserves to be noticed that Revenue did not place on record about the status of the 2/3rd stakeholder’s assessments. It is also further noticed that the land in question was sold on 4th March, 2008, the fact of which was also stated in the assessment order. However, for the best reasons known to the A.O. he treats the previous year as 2008-09 whereas the previous year should have been 2007-08. Consequently, the issue could have been considered in A.Y. 2008-09 and not in A.Y. 2009-10 in which year there is no such transaction of sale of land. The A.O. in our view, has considered the assessment year wrongly and initiated proceedings in a later year, when the property was sold on 04.03.2008 relevant to A.Y. 2008-09. In view of that the contentions of the Revenue does not require any consideration - Decided in favour of assessee
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2016 (2) TMI 737
Disallowance of interest paid on the loan - loan applied for acquisition of the land until the date of construction of the building was completed by holding that the same has to be capitalized - Held that:- We find force in the contention of the learned AR. Since the land was handed over for construction on the very same day it was purchased, it is obvious that the land was put to use for the purpose of business of the assessee. Hence the interest attributable for purchase of the land should be treated as allowable business expenditure and need not be capitalized. Therefore we hereby direct the learned Assessing Officer to delete the addition made by him on this count. - Decided against revenue Restriction of excess depreciation claimed on software - Held that:- CIT relying on the decision in the case of Amway India Enterprises Vs. DCIT [2008 (2) TMI 454 - ITAT DELHI-C] correctly held that the assessee would be entitled for depreciation @ 60% since “computer software” falls in the category of “plant”. On perusing the facts of the case, we find the decision of learned CIT(A) to be justified because the Special Bench of the Tribunal (supra) has categorically held that with effect from 01.04.2003 “computer software” has to be classified as “tangible asset” under the heading ‘plant’ as mentioned in Appendix I to Income Tax Rules, 1962. Therefore we do not find it necessary to interfere with the order of the CIT (A) on this issue.- Decided against revenue
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2016 (2) TMI 736
TDS liability on cooperative society - Whether a co-operative society, carrying on banking business with the approval of the Reserve Bank of India, is liable to deduct tax U/s.194A on the interest paid to its members? - Held that:- For the relevant assessment years 2008-09 to 2011-12 the assessee would not be liable to deduct tax U/s. 194 of the Act as the none of the State or Central enactments such as the Tamil Nadu Co-operative societies Act, 1983, the Multi-State Co-operative Societies Act, 2002, the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949 and the National Bank for Agriculture and Rural development Act, 1981 do not make any distinction between a co-operative society engaged in carrying on banking business and a co-operative bank. However, from 01.06.2015 onwards the appellant cannot escape from the liability for deducting tax at source. - Decided in favour of assessee
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2016 (2) TMI 735
Benefit of exemption u/s 11 and 12 - Held that:- As the activities carried out by the Assessee certainly amounts to charitable purpose, as it is being covered under the limb “education” to the definition of charitable purpose is contained in section 2(15) of the Act. Therefore, the Assessee has to be necessarily considered a genuine charitable organization eligible to claim exemption u/s 11 & 12 of the Act and the provisions of the first proviso to section 2(15) do not apply to the case of the appellant. - Decided in favour of assessee.
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2016 (2) TMI 734
Addition on account of bad debt - CIT(A) deleted the addition - Held that:- In this case their lordship referred to the Circular no. 551 dated 23.01.1990 of the CBDT and held that the amendment made to Section 36(1)(vii) of the act was a decision taken to eliminate litigation with regard to establishing their lordship what is bad debt further observed if the assessee writes off a debt as to bad debt without giving any reason he will not get any benefit from this as by virtue of Section 41(1) of the Act where a deduction has been allowed in respect of a bad debt which is irrecoverable but the amount or a part thereof is subsequently recovered then that amount shall be deemed to be profit and gains of business or profession of the relevant year. However, we may point out that the amendment of year, 1989 incorporates only the year of allowability but does not dispenses with the requirement of the assessee to prove that the debts has become a bad debt. In the present case, the assessee submitted party-wise detail, copies of the invoices/ bills raised against the debtors and other relevant documentary evidence to prove that the amounts was incorporated as revenue receipts and offered as income in the earlier financial year. The assessee also submitted copies of the e-mails and other correspondence with the debtors showing that the conscious and sincere efforts made by the assessee company towards recovery of impugned amounts and the assessee also submitted relevant copies of the ledger accounts and other evidence to show that the claimed debts has become bad and the same was properly submitted before the assessing officer during assessment proceedings. On the basis for foregoing discussion, we reach to a conclusion that the claim of the assessee supported by the required documentary proof about the offering the same income in the earlier financial year and efforts of the assessee for recovery as well as the intention of the assessee to treat the amounts of debts as bad debts. Thus, the issues is squarely covered in favour of the assessee by the ratio laid down by Hon’ble Apex Court in the case of TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] and hence we hold that the CIT(A) rightly granted to relief to the assessee. We are unable to see any valid reason to interfere with the impugned order and thus we confirm the same. - Decided against revenue
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2016 (2) TMI 733
Entitlement to claim u/s 10A - Held that:- The first appellate authority proceeded to consider the allegations of the AO and held that the AO has not specified which of the stipulated and necessary conditions of section 10A of the Act has not been met or complied with by the assessee. Regarding the non-preparation or non-filing of the Sales Tax Form, it was held by the ld. CIT(A) that this was procedural issue between the STPI UNIT and STP office and does not impinge upon the allowance of exemption u/s 10A, in case the conditions thereof are satisfied. We are in agreement with the ld. DR that the ld. CIT(A) has erred in holding that the assessee company has fulfilled all the conditions stipulated in Form No. 10A of the Act and the first appellate authority further erred in not taking into consideration the detailed facts and deficiencies recorded by the AO in the assessment order. Per contra, as we have observed hereinabove, the ld. CIT(A) rightly followed the principal of consistency and properly and correctly following the directions of the Tribunal, the first appellate authority properly considered and adjudicated the issue and after taking into consideration the conditions precedent for grant of exemption u/s 10A of the Act held that the assessee is entitled to exemption u/s10A of the Act. We are unable to see any valid reason to interfere with the impugned order and thus we uphold the conclusion of the first appellate authority. - Decided in favour of assessee
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2016 (2) TMI 732
Sale of land - nature of transaction - capital gain u/s.45(2) read with 2(47)(iv) or business income - whether land shown as investment was converted into stock-in-trade? - Held that:- In the present case since the property has been transferred in the relevant assessment year, the capital gain which arose in the year of its conversion i.e assessment year 2004-05 becomes taxable in the relevant asst year 2007-08. Further as per sec 45(2) the full value of consideration for computing capital gain will be the fair market value of the said land in the year of conversion i.e. Assessment year 2004-05 as held by the special Bench of Kolkata in the case of Octavis Steel [2002 (5) TMI 204 - ITAT CALCUTTA ] and Mumbai ‘D’ Bench in the case of Ramesh Abaji Walwavalkar [2013 (4) TMI 480 - ITAT, MUMBAI]. We find no infirmity in the order of Ld.CIT-A and he rightly followed the principle laid down by the Special Bench of Kolkata in directing the AO to compute capital gain in pursuance of the u/s 45(2) read with section 2(47)(iv) and to delete the addition made by the AO by treating the same as business income. - Decided against revenue
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Corporate Laws
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2016 (2) TMI 758
Scheme of Arrangement in the nature of Demerger - Appointed Date - Held that:- It is now settled law that it is open for a Company to propose any date as the appointed date, in its wisdom, and so long as the Scheme with a particular appointed date is approved by the members of the Company, the objections of the Regional Director may not be sustained. Accounting treatment proposed in the Scheme is not as per the accounting principles and apparently the accounting standard AS14 - With regard to the second observation the observation made by the Regional Director that the accounting treatment proposed in the Scheme is not as per the accounting principles and apparently accounting standard AS14, is based on the misconception and misreading of the said accounting standard. The plain reading of the said accounting standard makes it clear that AS14 would apply only in case of amalgamation and not in case of demerger as is envisaged in the present Scheme. Compliances of circulars of SEBI by the petitioner Demerged Company being listed with BSE and NSE - With regard to the third observation, the petitioner company has already made appropriate changes in the Scheme of Arrangement. A copy of the Scheme at AnnexureA to the petition, would show that the Scheme does contain the two observations as are quoted by the Regional Director in paragraph 2(f) of his report. The said observations are part of Clause 14 of the Scheme. As such, this observation is also not sustainable. Invitation of comments from the Income Tax Department - the report of the Regional Director, itself, shows that pursuant to the letter of the Regional Director, no adverse remarks, within the stipulated period of time, are received from the Income Tax Department. In the Circular date 15.1.2014 of the Ministry of Corporate Affairs, it is stipulated that if no response is received from the Income Tax Department within a period of fifteen days from the receipt of the notice by the Regional Director, it may be presumed that the Income Tax Department has no objection to the action proposed under Sections 391 to 394 of the Companies Act, 1956. In any case and without prejudice to the above, the petitioner companies submit that they would undertake the compliance of the Income Tax Act and Rules made thereunder. Thus this Court finds it appropriate to grant sanction to the present Scheme of Arrangement.
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2016 (2) TMI 757
Sanction of the Scheme of Amalgamation - Held that:- The observations made by the Regional Director having been addressed and the Official Liquidator having opined that the affairs of the petitionerTransferor Company have not been conducted in a manner prejudicial to the interest of its members or to the public interest, in the view of this Court, there does not appear to be any impediment in granting sanction to the Scheme of Amalgamation. From the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and not in violation to any provisions of law or contrary to public policy. The amalgamation under the proposed Scheme appears to be in the interest of the companies and their members and creditors, therefore, the Scheme deserves to be sanctioned. Accordingly, the Scheme as proposed by the petitioner companies is hereby sanctioned. It is however, clarified that the sanctioning of this Scheme would not absolve the petitioners or anyone who is otherwise liable for any responsibility or liability, only on account of this sanctioning.
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Service Tax
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2016 (2) TMI 774
Claim for refund of service tax alleged to have been collected from them contrary to law - Service tax was paid by the provider of "construction of residential complex service" - claim of refund by the joint owner / purchase of flat - The Assistant Commissioner rejected the refund claim on the ground that the joint application did not enclose proof that the tax paid by them had indeed been deposited to the credit of the government by the vendor of the property; that the plan of the house was such that, with minor alterations, it could altered in such a way that it could become three separate units; and on the further ground that the project of vendor was not restricted to their residential unit but was a larger complex of which their residence was only a part. Held that:- The vendor, in the present instance, is liable to be taxed on any activity outsourced by it,in undertaking any construction. The vendor was not in possession of the completion certificate at the time of receipt of consideration from the appellants. Therefore, the transaction between appellants and vendor does not fall within the exception to the `declared service.' The appellants claim that theirs is a single residential unit. However, a perusal of the sale agreement reveals transfer of land and built-up facilities along with the constructed house; this would include a share in the common roads, community facilities and other land that is not assigned specifically to a house owner. That is part of the agreement for transfer and the consideration includes these assets. The residential unit, therefore, cannot but be part of a complex. Hence, the exemption under notification no. 25/2012-ST dated 20th June 2012 is not available to the appellants. There can be no doubt that the agreement between the appellants and the vendor is for transfer of immoveable property by way of sale. The vendor renounces all rights to any part of the property that is transferred. The transaction is squarely covered by the exclusion from service and, therefore, outside the ambit of tax. The tax collected from the appellants by the vendor and deposited in the government account is without authority of law and is liable to be refunded under section 11B of Central Excise Act, 1944 as made applicable to Finance Act, 1994. The appellants have borne the incidence of the tax. Deposit of tax collected from the appellants by the vendor in the government account is established to the extent that it is humanly possible. - Refund allowed
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2016 (2) TMI 773
Demand of service tax on various activities i.e. (i) handling charges for loading and un-loading of the vehicle (ii) sales of extended warranty (iii) registration charges received for getting the vehicle sold, registered with the Regional Transport Authority - Held that:- the service tax is not exigible on handling charges, registration services and sale of spares and lubricant, which have been separately reflected in the invoices and have suffered VAT/Sales tax. We further hold-that the handling charges are in the nature of trading receipt and is not taxable. In respect of the registration charges, they have discharged their statutory obligation, as such, it is not taxable. In so far as the service tax on sale of extended warranty is concerned, although we find that the service tax may be exigible on the net discount/commission earned, but in absence of proper classification, both in the show-cause notice and the impugned order, we set aside the demand on this count. - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 772
Business auxiliary service - Appellant receives its brokerage from the borrower - principal agent relationship - period between 2005-06 and 2009-10 - Held that:- In view of an equation that is devoid of an agency relationship with the financier and rules out the provision of a service on behalf of the borrower from whom the appellant receives consideration, the activities of the appellant are outside the ambit of “business auxiliary service”. - Decided in favor of assessee.
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2016 (2) TMI 771
Quantum of Refund of service tax on services provided by commission agent, located outside India - for export of goods - 2% of the FOB value or 10% of the FOB value - NOTIFICATION No 41/2007 as amended - whether amendment is retrospective or prospective - Held that:- By substitution, subordinate legislation do not cause anomaly. It is true that if the subordinate legislation had intended that the benefit of 10% shall be allowed only from the date of substitution through Notification dated 07.12.2008, they would have expressly stated that the notification shall have prospective effect. But that is not done. Therefore, there cannot be presumption of prospective effect since substitution has a beneficial grant. Reliance of the appellant on the decision in Indian Tobacco Association [2005 (8) TMI 113 - SUPREME COURT OF INDIA] is appropriate for the incentive granted to the exporting sector. When the subordinate legislation takes recourse to the process of substitution that enlarges the scope of the benediction of the notification. - The expanded scope of the notification covers the vision of the legislature to boost the export scheme. Therefore, appeal is allowed.
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2016 (2) TMI 770
Demand of service tax from the person who is sub-letting of CAB - it was found that out the of the 62 cab operators, to whom the respondent has sub-let his vehicles, 34 operators were not registered with the Department and out of remaining 28 registered operators, 15 operators had not discharged service tax liability on the cabs procured from the respondent. - Held that:- The services have actually been provided by the other rent-a-cab operators and not by the assessee. The one who has provided the services is liable to pay the service tax. Merely because such service stands provided by the other sub-contractors by taking the respondent’s vehicle, will not shift the responsibility to pay service tax on the respondent. It is not the Revenue’s case that the respondent himself provided such services or letting of vehicles to the other sub-contractors is also covered by the definition of rent-a-cab service. - Decided against the revenue.
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Central Excise
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2016 (2) TMI 766
Duty appropriated against the duty defaulted for the month of October 2007 - demand along with interest and penalty - Subrule (3A) of Rule 8 of the Central Excise Rules, 2002 - Held that:- It is a fact that the show-cause notice, Order-in-Original and Order-in-Appeal are based on the violation of Rule 8(3A) of the Central Excise Rules, 2002 which require the payment of duty only through account current in case of violation of payment of duty in time as prescribed in Rule 8. As submitted by the ld. Counsel for the appellant that this Rule 8(3A) has been struck down by Hon'ble High Court of Gujarat, Madras and Punjab & Haryana in various judgments cited above, no duty and penalty can be imposed as observed in the case of Shreeji Surface Coatings P. Ltd. (2014 (12) TMI 656 - GUJARAT HIGH COURT ). Since the rule under which the entire proceedings have been initiated have been declared unconstitutional, no liability arises under the said Rules. Therefore, keeping in view the law laid down by the Hon'ble High Court of Gujarat, Madras and Punjab & Haryana, set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.
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2016 (2) TMI 765
Refund claim of excess central excise duty as a consequence of finalization of provisional assessment on account of discounts provided to various dealers/ customers on the provisional value - doctrine of unjust enrichment - Held that:- Facts have also been endorsed by the independent practicing Chartered Accountants, who on verification of the books of accounts of the appellant, vide certificates dated 20.12.2012, 28.02.2013, 23.07.2013 and 02.12.2014 have certified that the refund claimed amount do not form part of the finished goods, and thus, the appellant had not passed on the duty incidence to the dealers/customers or any other person. Furthermore, also find that the customers of the appellant have also issued the certificates, certifying that they have not availed any Cenvat credit of Central Excise duty charged by the appellant in their invoices and that final payment on account of goods have been made to the appellant after adjusting the amount mentioned in the credit notes raised by them. Though, the above referred documents were produced by the appellant before the lower authorities, but the same have not been considered in their proper prospective for adjudication of the refund claim. In view of above, it is of the firm opinion that the above modus operandi adopted by the appellant clearly demonstrate that they have neither recovered any amount in respect of discount from their buyers/dealers, nor have recovered any amount representing duty of Central Excise on such incentive amount. Hence, the refund claim of the appellant is not hit by the doctrine of unjust enrichment. - Decided in favour of assessee
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2016 (2) TMI 764
Denial of cenvat credit with regard to the disputed goods - Held that:- In the case of Mastech Technologies Pvt. Ltd. (2013 (5) TMI 241 - CESTAT NEW DELHI), this Tribunal has held that steel items used for fabrication of gantry rails on which EOT Crain runs, would be eligible for cenvat credit as input. In view of the decision in favour of eligibility of cenvat credit on the disputed goods, there is possibility on the part of the appellant to entertain the bonafide belief that credit is eligible to the appellant. Therefore, issuance of show cause notice in this case should be confined to a period of one year from the date of taking of such credit. Since, in this case the show cause notice has been issued beyond the period of one year, it is of the view that the same is barred by limitation of time. There is no specific allegation levelled against the appellant concerning fraud, collusion, suppression etc. with intent to evade payment of duty, it is of the considered opinion that the extended period of limitation cannot be invoked for denial of cenvat benefit to the appellant. - Decided in favour of assessee.
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2016 (2) TMI 763
Imposition of penalties - sustainability of demand of duty on the finished products based on the evidence put-forth by the Revenue in the proceedings before the lower authorities - Held that:- In the present case, the corroboration said to have been made is the admission statement of the appellant/assesses. Revenue stopped investigation on recording statement. No further verification or evidence was sought to be recovered for the clandestine manufacture, first of M.S. Ingots and thereafter, from M.S. Ingots to M.S. Angles, etc. and thereafter, their unaccounted clearance to various buyers. No verification was made in the appellant’s manufacturing unit or in their records. The admission made by the Director or Partners of the appellant /assesses gives a strong indication of the clandestine activity of the appellant /assessee. However, that by itself cannot be a conclusive evidence especially, as the product on which duty is demanded is M.S. Angles and Channels, etc., which are made from M.S. Ingots, which are in turn made from purported clandestinely received sponge iron. The statements did not provide details of receipts with dates, manufacture or sale to identifiable buyers etc. It is essential to have some piece of corroboration for such a clandestine activity other than the sole evidence of general admission statement of the Director or /partner. The contents of the statement itself was contested and denied later. Thus we find the confirmation of demand and imposition of penalties in these appeals are not sustainable. - Decided in favour of assessee
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2016 (2) TMI 762
Refund of amount made during the course of investigation, under protest - Commissioner (Appeals) held that the Original Authority should refund the amount to the appellant and the appropriation of the said amount against the dues of Shri V.K. Madan and others is not legally sustainable - Held that:- The Adjudicating Authority has adjusted the refund claim of the Appellant in the absence of any of these evidences. But what is the evidence on record with the Adjudicating Authority for holding this view that the Company’s accounts including that of Appellant are run by Shri V.K. Madan as his personal accounts? It is settled law that a finding of this nature should be always based on positive evidence to be gathered by department. The evidence is missing in this case. The adjudicating authority has also admitted before me that other than letter of Commissioner dated 17.07.09 and the letter dated 08.03.2010 of Assistant Commissioner (Prev.), no other evidence was made available to him. Thus in the absence of any legal, tangible unimpeachable evidences the impugned order is not sustainable and merits to be set aside - Decided against revenue
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2016 (2) TMI 761
Demand of excise duty on unaccounted, clandestine removal of re-rolled products of iron/steel - recovery of certain documents at the raw material supplier's end and statement of the Director of the appellant - Held that:- No other verification, including the verification at the appellant's premises has been made during the investigation. There is absolutely no corroboration relating to transportation of unaccounted sponge iron, payment of amount, manufacture of MS Ingots out of sponge iron and further manufacture of re-rolled products using such ingots, clearance of re-rolled products, details of transport or buyers of such unaccounted final product. Though it is not feasible to have evidences on all the above aspects, it is certainly required to have at least a few corroborative evidence to assert clandestine receipt of raw material, manufacture and clandestine removal of dutiable final products. In the present case such evidences are completely lacking. It is relevant to note that the learned Commissioner (Appeals) set aside the penalty imposed on Shri Drolia on the ground that he has joined the company as Director on 01/7/2008 and as such was not involved in the clandestine removal that happened during November 2007 to April 2008. There is element of contradiction here to the extent that while admitting that Shri Drolia was not with the company as Director during the impugned period, his statement to support the clandestine clearance during that period was relied upon. Even the purported admission in this statement is not based on any material evidence like private records, payment details etc. Thus the whole case of clandestine manufacture and clearance is without sound basis of corroborative, admissible evidences. - Decided in favour of assessee
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2016 (2) TMI 760
Assessable value - Revenue has sought to add the test charges so recovered in respect of the cylinders in the assessable value of the gases supplied by the appellant - Held that:- As regards the inclusion in the assessable value of the cylinder rental and maintenance charges in the case where the gases were supplied in the appellant’s own cylinders and the charges for cylinder testing done at the request of the customers, in the cases where the gases were supplied in the cylinders brought by the customers, it is not disputed that the gases, in question, were marketable as such inasmuch as a substantial quantity of the gases was being supplied in tankers as well as through pipe line and also in the cylinders brought by the customers and as such, the packing of the gases into cylinders is not necessary for making the gas marketable. In view of this factual matrix, the ratio of the Tribunal’s decision in the case of CCE v. Grasim Industries Ltd., [2014 (4) TMI 650 - CESTAT NEW DELHI] would be applicable to this case and these charges would not be includible in the assessable value. Also see case of Punjab Alkalis & Chemicals Ltd [2004 (3) TMI 489 - CESTAT, NEW DELHI] and Goyal M.G. Gases Pvt. Ltd.[2014 (8) TMI 657 - CESTAT NEW DELHI] - Decided against revenue
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2016 (2) TMI 759
Manufacture - captive consumption - Duty liability on oxygen produced and supplied to the contractor located within the premises of appellant - thrust of ld. Counsel’s argument is that the oxygen has not been cleared out of factory and hence exemption available in terms of notification No.67/95-CE, for captive consumption is rightly claimed by them - Held that:- We find that the original authority fell in error in examining the issue like ownership of goods, free of cost supply and return of recovered scrap etc. to arrive at the finding that there is no physical clearance or sale of goods and hence no duty liability. Clearance to FSNL through pipeline is an admitted fact. FSNL is a separate corporate entity having assigned factory premises of their own is also admitted. Sale for a consideration or ownership of goods are not relevant to decide excise duty liability. The contractual arrangements to meet business needs do not take away the duty liability which may otherwise exist. FSNL have established a factory at a site provided by the appellant inside their factory premises as per contract agreement. The oxygen is cleared to FSNL and consumed by FSNL. The exemption contemplated under notification No.67/95 is available if inputs (here ‘oxygen’) manufactured in a factory is used within the factory of production. Oxygen produced by appellant is not used by appellants in their factory of production. The same is cleared to factory of FSNL and used by FSNL, though on behalf of appellant. We find the exemption as above cannot be extended in such situations. - Decided against assessee
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CST, VAT & Sales Tax
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2016 (2) TMI 768
Levy / recovery of penalty form the heirs of deceased officer - Disciplinary action against the sales tax officer - failure to verify the correct address of the person sought registration at fake address - it was revealed that M/s.Umiya Industries committed an evasion of Sales Tax by practicing bogus billing activities.- Held that:- the petitioner passed away on 14.01.2008, and his heirs are on record. Nineteen years have passed since the Chargesheet was issued. The penalty order was passed on 05.11.2001. Over fourteen years have passed since then. It may be possible that the entire record may not be available either with the authorities or the heirs of the deceased petitioner. Further, the legal heirs would not be in a position to represent the case effectively as they may not be fully conversant with the facts. In the view of this Court, no fruitful purpose would be served by remanding the case to the Disciplinary Authority to open up another innings, after the death of the employee. - this Court does not consider it appropriate to remand the matter to the Disciplinary Authority.
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2016 (2) TMI 767
Denial of Input Tax and Credit (ITC) and levy of penalty - Gujarat Value Added Tax (GVAT) - company was using the entire purchase of castor oil seeds for production of castor oil, it claims input tax credit - in the reassessment proceedings it was held by the AO that the company would not be entitled for input tax credit to the proportion of the waste used by the company or the manufacturer and would be liable to pay tax under Section 11(3)(b)(iii) since the same was used as fuel. Held that:- it is clear that the entire purchase made by the company is intended to manufacture castor oil and oil based products. In the first phase, when crushing of the seeds takes place, only some portion of the seeds turn into oil. After the first process of crushing the seeds, most of the oil is extracted. The said castor oil cake is again crushed and the remaining portion of the castor oil is extracted therefrom in the second process leaving the waste, which is of no use to the company and therefore the same is used in the furnace as a fuel in the manufacture of castor oil as well as other products. Only the waste is used as fuel and that too again in the manufacturing process of oil. Therefore, in our opinion, it would not fall under proviso to Section 11(a) of the Act. As far as applicability of Section 11(3)(b)(iii) is concerned, the same would not be applicable since the entire purchase of castor seeds were used in the manufacture of castor oil and only the waste product was used as a fuel, that too, in the manufacture of castor oil. It is not even the case of the appellant-State that the castor oil seeds or a part thereof was purchased for using them as fuel. Deoiled cake is a byproduct and therefore it cannot be said that the same was purchases for using as a fuel. Deoiled cake is an inevitable byproduct which the company can throw it away as waste or use it as a fuel. There is no deliberate attempt on the part of the Company to manufacture Deoiled cake so that the same can be used as fuel. - input tax credit allowed - Decided against the revenue.
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Wealth tax
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2016 (2) TMI 769
Inclusion of land into net wealth - valuation - it was argued that, since the road alignment was not finalized and it is not known on which part of the land the proposed road passes through unless the concerned authority, namely, Chennai Metropolitan Development Authority, finalizes the alignment of the proposed 100 ft. road across the land, it cannot be said that the land in question could be used for construction. - Held that:- The Kerala High Court had no occasion to consider the proposal for formation of any road across the land and pending demarcation, and the impossibility of construction of building on the land was not subject matter before the Kerala High Court. Therefore, this Tribunal is of the considered opinion that this judgment of Kerala High Court may not be any assistance to the Revenue. It is to be remembered that proposal of the road through the subject land and pending finalization and demarcation of exact location, the authorities concerned may not permit any construction over the land. Therefore, this disadvantageous position faced by the assessee cannot be ignored while valuing the land. Since the assessee himself valued the land at ₹ 83 per sq.ft., this Tribunal is of the considered opinion that estimation on the basis of guideline value is not justified. Accordingly, the orders of the lower authorities are set aside and the entire addition made by the Assessing Officer is deleted. - Decided in favor of assessee.
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Indian Laws
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2016 (2) TMI 756
Writ jurisdiction to entertain the present petition - proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Held that:- There is a clinching reason for not entertaining the petition and relegating the petitioner before the Debts Recovery Tribunal. It is an admitted position that principal borrower has already approached the Debts Recovery Tribunal by filing the aforesaid S.A. No.122 of 2015 under Section 17 of the Act. The same is pending and the Tribunal is seized with the said proceedings. Interim directions have been operating in that matter. It relates to the controversy and the subject matter. It would be entirely appropriate that the petitioner approaches the Tribunal to agitate his rights by filing appropriate application in the said proceedings. In any view, therefore, the petitioner has to get his rights agitated by approaching the Tribunal which is a statutory remedy available. In the aforesaid view, present petition is not entertained and dismissed, leaving the petitioner at liberty to approach the Debts Recovery Tribunal. It goes without saying that this Court has not gone into the merits of the case of the petitioner.
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